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New Cigarette Tax: Yea or Nay?

If a coalition of business, health and other advocacy groups have their way, cigarettes in the Hoosier state will cost $2 more per pack.

Several organizations, including Tobacco Free Indiana and Raise It For Health Coalition, are lobbying this year’s state legislature to triple the current cigarette tax, established at 99.5 cents per pack in July 2007. A tandem lobbying effort advocates increasing the legal smoking age to 21.

Todd Perry, a cashier for NewMarket, retrieves a pack of smokes from the Syracuse outlet’s cigarette case. Cigarette prices at the store range from $4.80 to $7.32 a pack, and could go higher if a $2 state cigarette tax increase proposal becomes law. (Photo by Ray Balogh)

The 2019 legislature is expected to be in session through April, so the battle has just begun.

The History

A tax increase proposal has been forwarded in the last two legislative sessions. The first proposal was an increase of $1; the second, $1.50.

Neither effort was successful.

Nor was last year’s measure to raise the legal smoking age from 18 to 21, which failed in the Indiana House of Representatives.

Since the last increase 11 years ago, more than half the states in the U.S. have increased their cigarette taxes. Indiana’s dollar-per-pack assessment remains one of the lowest in the nation.

The state is also second to last in public health spending.

Despite a 30-year downward trend in smoking, Hoosiers’ cigarette consumption exceeds the national average in every demographic category — sex, age, income, education and location of residence (urban, suburban and rural).

The Stakes

Nearly one in five — more than 1 million — Hoosiers smoke, and approximately 11,000 of them die each year from tobacco-related illnesses.

The toll on state government and businesses approaches $7.6 billion annually, including $5.4 billion in health care costs and decreased productivity and $2.2 billion for ramifications from secondhand smoke.

According to www.raiseitforhealth.com, “While Indiana has made great gains in attracting new businesses, the state’s poor health rankings are holding us back from achieving even more success.

“Companies and site selectors consider workforce health when making decisions to locate or expand in the state, and Indiana could be missing out on valuable opportunities due to a lack of focus on health and smoking prevention and cessation.

“We must do more to build Indiana’s reputation as not only a great state to do business, but one that demonstrates that its citizens and leadership care about their health.”

The group also cites studies indicating 95 percent of opioid users are also addicted smokers.

The Pros

Proponents allege two positive consequences of the new tax: raising revenue and decreasing smoking. An estimated $358 million would be raised in the first year of the tax increase and a projected 130,000 smokers would quit or forego the habit because of the higher price of cigarettes.

Antismoking advocates claim the additional revenue could be used to battle other vital public health issues, including obesity and infant mortality.

The Cons

Indiana political sentiment generally militates against raising taxes in any form, so state representatives are resistant to adding another burden on taxpaying citizens.

Indiana received $568 million in tobacco settlement payments last year, a residual benefit of the nationwide $206 billion 25-year Tobacco Master Settlement Agreement of 1998. Yet the state allocated only $7.5 million, or slightly more than 1 percent, of the annual payment on tobacco prevention and education.

Opponents of the tax contend the settlement funds should be used before approving a tax increase. “If you don’t need a tax, don’t enact it,” said Luke Kenley, former senate appropriations committee chairman.

Others resist the tax unless the revenues are specifically mandated for tobacco-related expenses like cessation programs and some citizens object on the libertarian grounds of “leaving the smokers alone.”